Aussie construction leader makes a shocking admission about the state of the country's housing market

Daily Mail​

8 hours ago

This boss of one of Australia's largest builders has declared the housing industry is still under intense pressure, despite an easing in supply chain disruptions, labour shortages and soaring material prices.
Metricon Chief Executive Brad Duggan said the collapse of thousands of construction firms in the years following the Covid pandemic had thinned the industry.
He said while that was good for his business - there is less competition - it could worsen the nation's critical shortage of dwellings and further spike house prices.
Mr Duggan said a home in 2025 had grown about 50 per cent more expensive than a like-for-like home in 2019 and that passing those costs onto consumers had become increasingly challenging because 'people just can't afford those houses'.
Half of the rise in price he attributed to material costs and the other half to labour shortages. Worryingly, he claimed that without major reforms, the industry does not have a chance of improving housing supply.
'[Builders collapsing] is great from a competitive point of view,' he told The Elephant in the Room property podcast.
'But not from the point of view of the pretty significant housing challenge that Australia faces.'
Mr Duggan saw the impacts of industry disruptions firsthand. He joined Metricon midway through 2022 as chief financial and operating officer, when the firm was financially struggling.
Since then, Mr Duggan has led an $80 million turnaround, pulling the company back into the black, garnering him a promotion to chief executive role.
He said the years since Covid pandemic had been so challenging for the building industry because it disrupted about 20 years of relative stability.
Before the outbreak of Covid-19, he explained, companies could reliably predict costs and were empowered to offer customers fixed-price contracts that wouldn't shift through long construction timeframes.
'Then you hit quite a tumultuous and unprecedented time with Covid, we had a war in Ukraine, which is where a large amount of lumber comes from, plus all the disruption of shipping,' Mr Duggan said.
'In effectively 18 months, we saw a 45 per cent increase in input costs. When you put that into an environment where you've guaranteed a customer's price and locked it in for 12 months, it becomes really difficult.'
The following construction 'boom', spurred by the HomeBuilder stimulus package, was, as a result, 'profitless', he said.
Seven thousand operators went under in the ensuing three years, leaving surviving builders struggling to keep up with housing needs.
'You've got big monsters like Porter Davis in that group, and that organisation alone was building 2500 homes,' Mr Duggan said. 'That's a significant amount of capability that went missing.'
Other builders tried to exit contracts or inflate costs in a bid to remain viable, which left Aussie customers in precarious positions.
Mr Duggan said that was not an option for Metricon.
'We'd made a lot of commitments to customers and once we sign a contract and we're on site, there's no way we'd even think about trying to reprice,' Mr Duggan said.
'That was a non-negotiable for us.
'The secret to success for us was the grind. We had to find a way to get to the end of that workbook that was caught in the fixed-price contract scenario.'
The building boss said he worked with all sides of the business to try buy time for projects.
He liaised with suppliers, financiers and trade credit insurers, before even undertaking a restructure of the whole company.
Mr Duggan said he was concerned by the greater housing challenge in Australia, despite his own successes in navigating the past three years.
'There are fewer builders out there with the ability to make a difference in [addressing] housing supply,' he said.
'The other thing you can't forget is the impact these builders have in their communities. If a big builder falls over, the consequences … are significant.'
Metricon, with Mr Duggan at the helm, has called for a national housing summit to address the challenges in the building industry.
He wants the government to ease restrictions on skilled migration to alleviate labour shortages as well as a focus on mental health support to retain workers already in the field.
He also believes more innovation and flexibility should be encouraged in the sector, specifically around building practices and management of supply chains.